tag:blogger.com,1999:blog-6525425772304841899.post7804583001469062792..comments2023-12-17T18:00:38.652-08:00Comments on Econ Tricks: How Has the Price of Madden Games Held Stable?Greg Finleyhttp://www.blogger.com/profile/06005875920306936097noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-6525425772304841899.post-44928205870712540052010-06-09T11:22:21.432-07:002010-06-09T11:22:21.432-07:00Very good point about low marginal cost of product...Very good point about low marginal cost of production.<br /><br />If it costs $2 to manufacture, ship, and stock a copy of the game, any price above that represents a profit. But EA doesn't want to sell a lot of 2010copies in June for $5, because it will hurt demand for the 2011 version.<br /><br />It's also interesting to compare this to, say, iPhones. There is less perfect information about when new models come out. Also, each year's new Madden costs about the same as last year's Madden, while the iPhone is constantly dropping in price. The first iPhone started at $499 in 2007, and the new iPhone, which is vastly superior, starts at $199. I'm assuming the monthly bill is about the same for both.Greg Finleyhttps://www.blogger.com/profile/06005875920306936097noreply@blogger.comtag:blogger.com,1999:blog-6525425772304841899.post-34600364470108800662010-06-09T11:08:47.872-07:002010-06-09T11:08:47.872-07:00I think the most interesting aspect there--and dif...I think the most interesting aspect there--and difference from the car market--is the cost of production. Once the R&D is done for the games (which at this point is probably very little), there's not much cost to printing onto a disc. <br /><br />On the other hand, cars come with a lot more cost to build, if for no other reason than the materials in the car themselves. So why WOULDN'T they lower the price of Madden '10, given the cost is essentially zero.<br /><br />I think your reasoning might be a good one: they don't want to let those 'high demand' buyers wait for the lower price. Now if they could somehow discriminate without worry of people changing their behavior, I imagine they would. <br /><br />But I don't think there's much in the way of having the most updated version of the game become popular after the most recent season than before it. So if they lower the price, there's little cost to waiting...and the following year, buyers would simply buy 2011 after the season is over. But I'm speculating. Maybe everyone absolutely HAS TO HAVE IT right when it comes out.<br /><br />Interesting issue here. And I can't think of another product that does something like this.BMMillsyhttps://www.blogger.com/profile/05121540047611227512noreply@blogger.com